Chancellor George Osborne today basked in the biggest boost to Britain’s growth prospects in 14 years as his fiscal watchdog knocked £73 billlion off the nation’s borrowing bill.

The Office for Budget Responsibility raised this year’s growth estimates sharply from 0.6% to 1.4%, in line with most economic forecasters, and lifted its 2014 predictions from 1.8% to 2.4% — the first upgrade from the OBR since the autumn of 2010 before the eurozone’s debt crisis took hold.

In March, the OBR predicted the Government would have to borrow £434 billion between 2013-14 and 2017-18. But stronger growth prospects are feeding into the public finances, reducing the overall borrowing bill by £73 billion and balancing the budget by 2018-19.

ING Bank economist James Knightley said: “The fiscal situation is already looking much better and with the economy gaining significant momentum the Chancellor, in our view, will likely be able to announce further cuts to borrowing and debt forecasts next year.”

But Osborne also stressed that the “job is not done” and the watchdog warned it also expects the UK economy’s strong quarterly growth rates to slow next year. The OBR further believes the recent improvement in growth is almost entirely cyclical, bringing the Chancellor no closer to his target of narrowing the structural deficit, which is impervious to the economic cycle. It said: “Although consumer confidence, credit conditions and the housing market have improved, productivity and real earnings growth have remained weak.”

The OBR’s latest forecasts show trade making no contribution to the recovery over the next five years and business investment falling far short of its March predictions. Consumers are instead driving the recovery with higher spending and lower savings and houses prices are expected to be 10% higher over the next five years compared with March.

The news came as the Bank of England’s monetary policy committee left interest rates unchanged at their record low of 0.5% and leaving its money-printing programme unchanged at £375 billion. The MPC will not consider possible interest rate rises until unemployment — at present 7.6% — falls to 7%. The OBR does not believe unemployment will hit the 7% threshold until the second quarter of 2015.

Jonathan Portes, chief executive of the National Institute for Economic and Social Research, said the Chancellor had fallen well short of his original ambitions. “We have had less than half that growth [predicted in the 2010 Emergency Budget] and the deficit is still very much with us. We’re back on track but it is three years too late.”

The statement came amid strong news from a buoyant car industry, where a 7% rise in November sales took total sales for the 11 months of the year so far to 2.11 million, surpassing all of last year. Official figures meanwhile showed inward investment from foreign investors rose from £28.9 billion in 2011 to £35.4 billion in 2012, although this remains below pre-recession peaks.